Should you opt for EMI Moratorium or Not during COVID-19?

Should you opt for EMI Moratorium or Not during COVID-19?

The RBI-proposed three-month EMI moratorium is an excellent initiative for the financially needy people during the coronavirus pandemic. However, it is believed that the interest amount for this time frame could likely act as a financial burden for the borrowers later on. Hence, to help you make the right decision, here in this article, we will discuss whether applying for the moratorium is actually the correct thing to do or not.

Should you opt for EMI Moratorium or Not during COVID-19?

The on-going COVID-19 pandemic has forced the global economy to enter into a recession. A developing country like India is also facing the challenge to stabilize its economy. The majority of the businesses are suffering a massive amount of losses due to the extended lockdown period. Under such situations, it has become quite difficult for the borrowers to pay their loan EMIs on time. As a result, the RBI announced the loan repayment moratorium for three months, i.e. March, April, and May, to offer relief to several people, especially those who are suffering from liquidity problems. 

You will know more about the effects of the proposed delay on your outstanding amount using the Moratorium EMI Calculator in this articleHowever, before jumping into the central theme of the article, let’s discuss a few significant aspects of the RBI’s three-month moratorium. 

The RBI Proposed Moratorium in Brief

As per the RBI guidelines, all types of loans, such as personal loans, home loans, crop loan, business loans, vehicle loans, agricultural term loans, credit card dues, etc., are eligible for the moratorium. Besides, the delay in the loan repayment will not reflect on the credit report, and the borrowers will not be subjected to any forms of penalty. 

However, those who are opting for EMI moratorium are required to pay the interest amount applicable for the three months later. As such, the borrowers who apply for the moratorium need to pay an extra amount in the long term. 

The Options you get when you opt for the moratorium

If you apply for the RBI Moratorium, the borrowers are likely to get one of the three options from the lenders:

  1. Borrowers will get the opportunity to repay their pending interest amount through a one-time payment.
  2. The pending interest will be added to the outstanding amount of the borrowers; as a result, their EMI loan amount will increase for the remaining months.
  3. The EMI amount will remain unchanged, but the lender might increase the tenure of the loan. 

The Impact of Opting for the Moratorium

Opting for the moratorium will undoubtedly increase your financial burden in the long term. If you calculate the net effects using a Moratorium EMI Calculator, you will be surprised to know that it will broadly impact the people who have taken a loan recently (2-3 years ago). On the other hand, the impact will be significantly lesser for relatively older loans. 

For whom is the moratorium meant for?

The EMI moratorium is an excellent option for those who are facing financial difficulties during the coronavirus lockdown period. It intends to help the needy people suffering from lack of financial support. Once the lockdown period is over, they need to pay their pending loan amount following the same old payment pattern. 

Is it wise to apply for the moratorium?

You need to understand that the RBI Moratorium is not a waiver by any means. The moratorium means a delay in the EMI repayment; therefore, you will have to pay your dues at some point in time later. If you opt for the moratorium option, you need to pay the interest amount for these three months as well. 

So, if you have sufficient financial resources at present, it would be wise to clear your dues without applying for the moratorium. This will help you avoid any additional spending, and more importantly, the financial burden in the long term. 


If you have pending credit card dues, it is highly recommended to clear them without further delay. Unlike other kinds of loans, interest on credit cards is charged at 3%-4% monthly. So, if you skip the repayment for three months, you will have to pay an additional 10%-12% interest, which is huge. Besides, you will have to pay the interest on the interest amount as well. Ultimately, it is entirely your call, and you need to decide according to your financial stability. 

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